Stock markets continued to move up on Wednesday, following the strong decline over the past few days, which was due to the Fed, ECB and Bank of England meetings. The two-day rally can be explained as the rebound after very strong sell-offs that was a result of bad news or economic data. As soon as the negative backdrop subsided, the pressure stopped.
A similar pattern was observed before the Fed meeting, when stock markets rose on expectations of a slowdown in rate hikes by the Fed. But when the central bank said it was expecting a slightly higher rate, the picture changed from positive to negative. Most likely, investors became worried about the onset of recession even though Fed Chairman Jerome Powell refuted it.
The rally will continue if the revised Q3 GDP data in the US shows a value of 2.9% or beyond and if the PCE index exceeds expectations.
Forecasts for today:
USD/JPY
The pair is consolidating below 132.55. Most likely, improving market sentiment will push it to 134.00.
GBP/USD
The pair is trading below 1.2145. If the data from the US exceed expectations, the pair will rise to 1.2245.
